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tv   Worldwide Exchange  CNBC  October 22, 2012 4:00am-6:00am EDT

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hello, welcome to today's edition of "worldwide exchange." i'm ross westgate. here are your headlines from around the world. earning season in europe decks off with high expectations at phillips in the third quarter. c cheo says he's worried about macro headwinds. >> i'm concerned about the state of the general world economy. we see uncertainty in the u.s. and china slowing. >> bp is in advanced talks with rosneff but says no decision has yet been made. and president obama, mitt romney head into their final debate tonight as new poll shows they're now in a dead heat with just two weeks to go before
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election day. and plus japan records its sharpest export since last year's devastating earthquake. raising fears the world's third biggest economy could be slipping back into recession. it's the start of another week here on on "worldwide exchange." kelly is state side helping to host "squawk on the street." p meanwhile plenty to come still on today's show. here in london, protesters have been marching against austerity. one of our reporters was there. demonstrators took out their anger on multinational companies. in new york, wall street a underwhelmed as corporate giants like ge, part owner of this station, had cautious revenues. we'll pibd out if cat pill what
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are and yahoo! will buck the trend or affirm it pnd and obama and romney squaring off, who is likely to deliver the knockout below. we start out with the focus squarely on earnings. fill whips beat expectations. the firm which traditionally kicks off third quarter earnings season said it's on track with its cost savings plan. ceo says the firm is pretty well placed to hit targets. >> i'm concerned about the state of the general world economy. we see uncertainty in the u.s. and china slowing he can but phillip is self help. we're so focused with driving our own improvements that i believe we're on a good path towards our targets. >> so phillips doing okay in europe, but elsewhere the numbers paint a more dismal picture. 78 companies surpass
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expectations on on the bottom line, but only 42% beat on on revenues. and 38% hain the last week. and this clocks in well below the 62% long term average. joining us for the first hour, james bevin, ccla investment management. james, thanks for joining us. how concerned should investors be about the revenue misses we're getting? >> i'm much more interested in the margin misses because revenue in the sensepr predictable margins can be much more tragic because it speaks volumes about diminishing returns. and i think in terms of earnings expect takings, the s&p will probably again have to see a significant down shift in the consensus for 2013 earnings, to
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perhaps less than 100. >> so we need a repricing? >> i think equity pricings should go up. >> despite the -- >> absolutely. >> you might have to explain. >> what is clear that we're in for a period of very low interest rates, very low bond yields. i'm not one of the people who says the bond yield will rise dramatically. because some banks will keep the lid on the continue. they'll continue quantitative easing. i expect to see more quantitative easing. i expect to seat bank of japan and euro land both coming up to the season with much more quantitative easing following the lead of the bank of england and federal reserve. and when we get there, i think there will be a tethering and in that environment, we should be paying higher priceses for real growth in the equity market. on that basis, i think the s&p 500 is heading up to 1500 points, not based on an explosion of earnings, but just
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an expectation that people should pay more. >> interesting thesis. are we in -- somebody described this as a next can standoff between the flood of liquidity and then concerns surrounding the basic economy. if you're going to have a lot more qe, it's because the economy isn't performing. and also because of fiscal cliff and -- >> you say where do we trace all these problems back to. it has to be the realty that both economies are still deleveraging. the medicine is not fiscal spending. the hard reality is the government will have to continue to spend less and that's very difficult for economies in the near term. central banks will keep money rates and monetary policy extraordinarily easy relative to business as usual. we ought to see more debt write donees a
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downs and writeoffs. >> you say consistent with around 3% gdp growth. >> absolutely. but all the time you look at the gdp numbers that are backwards, revisions and everybody is gloomy. if you you simply take the lead indicators and joan them up in terms of the historic relationship, we are looking at an acceleration of u.s. growth largely based on the u.s. housing market and parts of corporate spending. >> although the fiscal issue, if we fall off it, they say that take as percent of gdp. >> this year fiscal tightening is worth about 1% of gdp. fiscal cliff probably 1.5% of growth. that's well-known. that should therefore be in the price. it's excitement, isn't it? what is fascinating is when the
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market is wrong footed. and i think the market is relatively bearish. >> all right. good to have you on. plenty more to come from you. heineken reports tomorrow on wednesday we have numbers out from vw and volvo and on thursday, santander and credit suisse also report figures as well as unilever and wbp. in the u.s., we'll be looking at figures in cat pill ar and yahoo!. facebook is later on in the week. you can read up why the stock selloff may be limited. and if you want to join the conversation here, you can get in touch with us, at @cnbcwex.
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staying on the corporate theme, bp has confirmed it is in advanced talks with rosneff to sell its stake, but no agreement has yet been made. the oil giant said a further announcement would be forthcoming if and when a deal was made. they would sell the stake in exchange for cash and rosneff stock. we're also joined by neal atkinson at data monitor. good to see you. thanks for joining us. bearing in mind we've been feeling bp was frozen out of russia, if they manage to do this deal, does it get them back in the game in a big way? because they could i suppose reenergize the thought of a shore partner. >> takes potential to energize, yes, but let's get the gloomy bit over first.
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i wish i had used the phrase first out of the frying pan and into the fire. obviously the history of the tnk/bp relationship has been pretty bad. at one point bob dudley physically intimidating and so on and so forth. so that was brouound to end in divorce in some way. rosneff does employ bp potentially massive advantage over the next 20 to 30 years in terms of getting access to russian resources. and for companies like bp and it peers, access to resources so they're able to grow production is the holy grail. that is somehow shareholder value will be created. if and when it does go through, and it looks highly likely that it will, it's a game changer for
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bp, but it does carry huge political risks. and that's very difficult to speculate from this point. >> can you quantify? >> rosneff for all intents and purposes is crumbling oil ink and the head of rosneff is clearly very close to mr. putin. and we have seen in past behavior from mr. putin towards the energy sector that attitudes can change, people can fall out, there can be abrupt changes in attitude towards foreign investors. and bp potentially and we don't want to overrate it might find itself in a few years side dealing with different people with different attitudes to foreigners and it could find themselves -- >> that's the oil business. >> in russia. not necessarily the oil business everywhere. all those of course as you were
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henti hinting at, russia isn't the only one that can behave irrationally. >> tnk was threatening to hold dividend payments, but reports suggest rosneff profits, bp a 19% shareholder, received a $540 million payout. so enormous cut. would that worry you as an investor? >> certainly worries me because when i look at the global oil sectors, bp is just one of many and when i compare bp's position to that of chevron, i would much rather be buying chevron right now. >> i suspect you're probably right. bp is of course at a period in it history which has seen some of its darkest ever days. but if this russian deal does go through and if moving on to another issue bp is able to get
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some kind of closure with its mexico liabilities, then potentially bp is back on a relatively smooth path. having said that, of course it's taken an enormous amount of damage since the gulf of mexico disaster. but, yes, as of today, i think i'd rather be with chevron but i wouldn't give up on bp at all. >> let's move on to the canadian government. the bid for the canadian bid has been watched and we have this report. >> resources nationalism a term typically applied to emerging countries, but after canada blocked the pat troe mass acquisition, many are opening how canada is to foreign
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investment. also claims to the deal won't bring net benefits to the country. supporters say that the government has been short on the precise reasons as to why they have blocked this deal and they have been short on transparent city. what we know is petro bass has 30 days in which to adjust the terms before a final decision is made. speaking to us here the energy minister was very pragmatic and there were alternative investments that malaysia could pursue. >> if we have an opportunity to i in-vest in canada, of course we will be happy. on the other hand, if canada finds that such investment is not welcome, then we will go to other countries. >> at $5.2 billion, this isn't a blockbuster deal.
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but if the progress does fall over, it could spell trouble for the $15.1 billion acquisition of maximenergy. the other is the broaden asian angle. canada cannot afford to ignore asia and the massive demand. >> public opinion poll shows a lot of unease, but it's ironic because what the prime minister of canada stephen harper has been in asia recently a couple weeks ago the four premieres were in china. what were they all doing? saying asia you're our market, we want to sell things to you. so it's a two way street here. >> the next step in the story is mr. petromas will sweeten the terms or severimply walk away. >> so are they shooting themselves in the foot? >> i think this is an odd decision on the part of canada.
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dan yurgin just alluded to it being a market for asian exports. and of course the united states is seeing a resurgence in its own domestic production of oil and gas. which isn't to say canada will be shut out, but the u.s. will become more self-sufficient. canada will see booming production of oil and gas itself in years to come and asia which is the biggest growing market is an obvious place. and to have a partnership with a company like petromas would appear to make sense. one wonders if there's domestic politics -- >> they blocked the lse bid. >> but you can understand that because these are strategic reserves and once they're gone, they're gone. >> maybe slightly more take
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strategic than degnome. >> it's very intriguing how little we've seen protectionism rearing its head through these difficult times. if you said what is the next potential shoe to drop, it would be a resurgence of protectionist policies. >> james, you stay, neal, you go. thank you very much and have a good week. we understand that european parliament committee is advising to oppose the appointment to the ecb board. asked to propose a different ecb board candidate. the reason to say we advise against it is gender diversity is an issue. european parliament can't veto board appointments, it can only advise. let's bring you you up to
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speed where we stand. earnings aside with the general asset market prices with the asian update. >> asian markets finished on a mixed note following dis disappointing earnings from the u.s. shanghai composite turned higher in the afternoon session as ban banks recovers. big energy and shale gas plays outperformed. bpoc backed newspaper said china has no grounds for more monetary easing, but investors continued to eye are market relations that will lower money rates. developers and financials helped. china mobile gained ground ahead q3 earnings. nikkei posted it long he was winning streak in more than a year. hope for more boj action.
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exporters also got a boost from the weaker yen. shares of sharp jumped over 7% on reports that it's lifting its igzo it is play output. more on that story a bit later in the show. elsewhere, south koreans kospi recovered some lost ground to end marginally in the red. large caps ended mixed ahead of earnings this week. the asx 200 pulled back on mining and bank and defensive plays, but green corp shares soared after investors bet on a bidding war following a $2.8 billion offer from u.s. rival adm. india sensex now higher by about 0.6%. ross, back to you. >> thanks for that. here advancers outpacing decliners by more than 3:2.
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2% gains for the dax. down 11 points for the ftse. xetra dax down a quarter. slims losses for the cac 40. ibex currently down a third of 1%. but we did see yields last week in spain and italy down to eight month lows. a little firmer today. but remember, we got down below that 5.3% level. ten year italian yields, 4.76. we'll keep our eyes on treasuries. gilts are substantially higher. as far as currency markets are concerned, euro dollar, 1.3029, so off the one month high. dollar is firmer against the yen. nearly back up to -- we'll get into japan in a moment. trading 1.6 # on cable, as well. mean while in spain, the prime minister's party, he's sort of got through the regional elections fairly comfortably, but is it a boost for the
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government's austerity plan. we'll be in madrid. bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
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rajoys has been given a boost after the government won 41 seats in parliament. 18 for socialists and 16 for the two nationalist parties. elections saw the national return to you power with 27 seats and that compares with 21 for a pro independence party. leader pledged to work with other parties if elected. jonathan house is in madrid. thanks for your patience. what impact if any do these election results have on the political process in terms of spain and timing and asking for assistance from the eu? >> i think this is a moderately positive result for rajoy. he has actually expanded on his
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parliamentary majority in the regional parliament in the galia region. he had a poor showing in the bags country, but they're sort of outliers in that they are sort of regional nationalist regions where the conservative party had never really done very well. so that's the poor result is in the really a surprise. i'm not sure the bailouts was a big part of the the calculus as far as timing. i think probably the key factor there is market pressure on him to come forward and made the bailout request. right now market conditions are pretty benign, so i think the government thinks they can take their time on that.
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>> what's going to happen for this proposed reform in catalonia? the referendum i should say rather than reforl. reform. >> the first step is regional elections. the majority party there has said that after the vote it plans to call a refer run dumb. so first we have to see what the outcome of the vote is and then we will see what happens with the referendum. this is potentially a pretty serious political challenge for the government of rajoy and the constitutional order in spain. constitutionally, a referendum called would be illegal, not recognized, but they're making sounds that they they will go ahead and do it anyway. so it's potentially a pretty
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important event. >> whether we ask for -- whether the government asks for assistance or not in the short term, unless the economics improve dramatically, what happens with the politics? is the politics likely to break things before the eu does? >> well, the thing is right now in spain, the main opposition, the soeshist party, the spanish social list party, is practically knocked completely out of commission. they're showing in the elections last night they sort of set new lows for the party, i believe. so that gives the ruling party of are a ohio who already has a parliamentary majority by the way, but the weakness of the
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socialist socialists gives them a lot more breathing space. >> jonathan, thanks very much for joining us. still to come, japan's trade data shows its territorial troubles with china are taking a toll. but could the dispute push the world's third biggest economy back into recession? we'll find out when we come back.
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earnings season if europe kicks off with a spark. phillips beat expectations thanks to cost cutting and solid sales growth. ceo is worried about macro headwinds. good i'm concerned about the state of the general world economy. we see uncertainty in the u.s. and china slowing.of the genera. we see uncertainty in the u.s. and china slowing. >> bp confirms talks with rosneff, but no decision has yet been made. and president obama and mitt romney head into their final debate tonight. new poll shows they're in a dead heat with just two weeks to go before election day. and japan records its sharpest drop in exports since the aftermath of last year's devastating earthquake, raising fresh fears world's biggest economy could be heading back
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into recession. >> we start off this week on a fatherly tepid mixed note. bond yields, we moved off the 7 1/2 month lows that we had in spain and italy, spain yields 5.43%. certainly no rush to request assistance just yet. current city m currency markets, u.s. dollar steady. dollar-yen firmer again up 79.67. and that's after japan's posted a wider than expected trade deficit in september. exports dropped their sharpest pace since the aftermath of last year's devastating earthquake.
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there are concerns they could slip back into recession, but the bank of japan governor says he still expectses to resume a moderate recovery. although he's added the bank will continue to main taken an easy monetary response keeping alive hopes of further stimulus. bank of japan meets october 30th. joining us for more, martin schultz. james is still with me in the studio. martin, good to see you. what's your own interpretation of the trade data, what it means for the economy and policy? >> well, these data are certainly quite bad in particular when we look at them at the seasonally adjusted level. we see that basically it has dropped tremendously low. so a strong impact. what's also important is that so far one or the other of the major markets of was slightly
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positive. this month in september we had them all in negative territory. so this is a big problem. >> so do you think we're going to flirt with the recession again? >> it looks like. i was still comparatively optimistic for the last quarter so far, but as long as global demand is not picking up, in asia we had positive signs and this is comes were getting a bit more cheerful that things for electronic, overall trade in asia were pick up quite a bit and we hope to participate in that more, but now with problems in china and on the other side japanese yen still being quite strong, we didn't see so much pickup on that side. >> as long as the rawl continues, how much damage will
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that do? >> i heard some terrible numbers that some people expecting minus 0.5, minus 0.8%. overall negative growth impact on the overall economy. while this is almost certainly overdone, but what we've seen for cars and major groups, the impact is between 0% and 50% in september. this is a big impact for japan's industry of course. so, yeah, it has an impact. >> there is a lot of talk in europe about the bank of japan coming to the table with aggressive quantitative easing. is that something you look forward to? >> well, yes. so far the domestic economy is really whats has been driving japan's industry and the overall economy. this year it will drive the economy next year. so the stimulus package from the the bank of japan would have a positive impact. also with overall exchange rate
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relations right now, people getting a bit more optimistic about the u.s., more stimulus is coming in asia, we see the yen a bit weaker. so overall the market reaction on the bad trade data today were actually not that bad and i would share this mild optimism. >> fiscal support presumably will be in fairly short supply. all the burden remains with the bank of japan. >> that is really a major concern globally. in particular in japan right now, the government is completely stuck. the opposition is trying to push out the current governments, so they won't agree on anything major factor stimulating the economy. so supplement for the current government on. if a new government is coming,
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it will take time before they can do something. so we will have more demand from the government side last year, but the last quarter doesn't look likelike good. >> martin, thanks very much. what do you think of japanese equities? >> it worries me that they're still way below the developed countries. the concern is that japan still is not focused on value relative to the core challenges of keeping the workforce going and so on. >> meanwhile despite japan's gloomy export data, tokyo stocks did manage to finish in the green. winner sharp. let's get the tdetails from tok. >> sharp sales closed up 7.4% in response to the reports that the
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firm is close to scoring a deal. hewlett-packard, dell and others with its latest lcd panels. investors have hopes that a long term contract will help the bottom line. some analysts point out, however, that further gains could be limited in light of sharp's shaky financial state and uncertainty surrounding it capital tie up negotiation with taiwan's precision industry. others say that a full scale recovery of lcd cannot be expected until sometime next year. this has weighed heavily on sharp sales. for the year the company stocks have lost more than three quarters of their value. back to you, ross. >> thanks very much for that. we have breaking news on chinese corporates. china mobile says january to september net profit a little better than the consensus before
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92.7. net pro net prfofit 31.1 billion. so looking a little better on the net profit forecast as. back to the uk. police and protesters have been clashing in london as hundreds broke away from anti-austerity demonstration in an attempt to stall some of the big companies. mcdonald's among the demonstrations with allegations they didn't pay enough tax. >> reporter: around 150,000 people took to the streets of britain's capital on saturday calling for more jobs, higher taxes on the rich, and an end to cuts. >> they have come from across the uk and in some cases europe to make their voices heard.
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and the focus is solidarity with spain, portugal and greece and it could replicate itself here in the uk. >> people are against the austerity programs. >> we're here to support against the austerity. >> i'm here to oppose what's happening in the schools and show my support. >> reporter: union organizers said their he mess an to the government was clear. >> government's policies of austerity are simply not working. we have an economy that's flat on its back, no economic growth, and it's causing immense damage. >> reporter: there were moments of humor and occasional tension. the sticky question of just how to trim a budget deficit bigger than many in the eurozone and a national debt topping a trillion pounds was one that proved decisive. opposition labor party leader
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was heckleded for saying some cuts would have to be made. he expanded on his plans. >> you can make different choices to put our young people back to work, to make banks work for the small business and take real action on energy prices in contrast to a government where you have one rule for those at the top and another rule for everybody else. >> reporter: with britain's coalition government warning of more pain ahead and some unions pushing for a general strike, the country's austerity strive could be set to escalate. >> germany is considering a greek buy back program. athens could be permitted to borrow money from the esm bailout fund to buy back its own debt. finance ministry didn't comment. meanwhile greece just a few
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weeks from asking for its next tranche of aid. and it looks like there's a rawl brewing between her kell and cameron. the ft suggests germ any may push to have next month's european budget summit canceled if britain insists on vetoing any deal other than a total freeze on spending. berlin is working hard to convince the uk to back a german compromise that would cap spending at 1% of the region's total gdp. james, how did do we trade for the ongoing maturations of the eurozone debt crisis? >> you can wholly understand there's a big issue about whether or not there should be money made available for fresh problems or simply to alleviate old problems. it doesn't really matter what debt is priced at in the markets
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in terms of the coupons. what's important is what you have to issue new debt at and what the debt service cost would then be. and i suspect that we have 18 months of time off in euro land because the ecb essentially can write checks for that period and the real crunch is in 18 months time when the ecb is expecting continued delivery from the politicians, democracies continuing austerity, reining back spending will be arising challenge and a big problem. >> 18 months of being relaxed. >> we have been muddling along. not relaxed at all. the problems are still substantial and very difficult to put through when we have democracies and voters won't be very toll plant. the correct medicine you've never seen high government debt associated with continued on going solid growth. >> and in m&a news, bp has
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confirmed it's in advanced talks in rosneff, but no agreement has been made yet. and a press release said a further announcement would be made if and when a deal was to happen. reports say potential $25 billion agreement selling the stake in exchange for cash and rosneff stock. and stefan owing he has come to for the week. is the suez plan not happening? >> no, the plan is now dead. they started informal negotiations in the summer before dropping the merger plan because of regulatory concerns. the merger would have created a dominant position in france with more than 60% of the market. therefore the two groups would
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have had to sell off a major part of the business in france. together 45 billion euros and market capitalization of 8.5 billion. officially the merger is dead, but a source said the merger plans may be revived in the future. both companies are struggling because of the crisis in europe. it lowered its full year guidance partly because of the crisis. market reaction 1% down on suez. >> euro star running all right? >> yeah. >> no problems? just want to know. always good to know the communication channels are open. >> working well. since the olympic games, you can even make phone calls in the
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tunnel. >> is that a good thing? i never know whether making calls like in airplanes, did i want to be contacted or not. stefane, good to have you on board this week. still to come on take's show, it boasts the longest bridge in the uae and already broken container handling records. find out more in our trade links special.
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opened a brand new $7 billion port which houses the first fully automated container yard in the region. there is hope that it will help support growth especially in nonoil related trade. louisa caught up with the ceo and began by asking him about that launch. >> we're really excited because on the first of september this year, we opened the port and big industrial zone and it's the shear scale of it and technological advancements that's come with it that we're most excited with. the port itself is five
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kilometers offshore and it's the longest and third longest bridge. it has four kilometer long keyboard, so imagine having to jog around that one in the morning. but it's fully automated. all robot tech containers. and on the first of september, the first ship we had in was the biggest container ship in the world. so a really exciting time for us. and the industrial zone is 417 square kilometers which is two-thirds the size of singapore. so almost the size of a small country. >> and how is this funded? what was the thinking behind the project and who do you anticipate will be your greatest partners? >> abu dhabi has a very clear strategy and it presented itself with a vision document for 2013. the essence is to transform an oil and gas economy into one that has 60% of its gdp funded
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by nonoil and gas related industries. so this is a national investment strategy. and an enabler to establish others. some of the clusters that we've already released deliberately designed for steel producing industries, glass, farm suit k5k58 pharmaceuticals, and heavy engineered products. how you wisely invest is of economic growth. >> it's a vision and if you have to take a detour to get to the end goal, that's okay, as well. so you haven't had hiccups along the way due to the financial crisis or would you anticipate that business could be interesting here in the
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beginning parts of the port's life? >> i think there's two parts. first in terms of long term visions of course, the directional. and few krystal balls are that well calibrated to be precise in terms of all of the things that are likely to unfold. fortunately the economic cries is hasn't had massive impact within the uiea, so it was maintained at the same pace throughout. the first phase of the industrial zone is 51 square kilometers and we've already pre-sold 25% of it. so we're ahead of target. and i think what we've seen is the attractiveness of low operating costs in an environment where it's easy to do business, but also one that's invested in world class transport infrastructure is the key to making a decision. >> coming back to what you were talking about in the first ship that came in was is that the
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largest tanker globally, who would you an tiss pay the to do the most business with? >> it had 14,200 containers on it. just an enormouses ship. and our existing ports physically can't get a ship of this size inside it. so of course what we've developed is a port safe guarded for 40, 50 years in to the future. and the assumthought that ships just get bigger in the future. you 00 nighted arab shipping have moved in.
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and cma is moving in. so we've moved our downtown business progressively into the new port and the's going really well. recovering british economies paid out a record 23 billion pounds in dividends for the third quarter. james, they're sitting on a record amount of cash, as well. how do you play that? >> in an environment where everybody is never us about the direction of equities, yields
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are attractive. value is relatively cheap so people have an entry opportunity. i think one needs to be careful about what high dividend is telling one. there are some companies that are relatively stressed, other companies reasonably high dividends, bags of growth particular pli when the yield is in the like as example vodaphone. this is an important part of the capital discipline. with a we don't want companies spending enormous amounts in growing that capacity, which is a real risk in mosts seek kells. we're not seeing that this time around. >> amazon reportedly upping a
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bid as it seeks to ramp up its fashion offers and at the same time bloomingdales might be considering setting up shop in london. national express newspaper says the time is right for bloomingdales to look outside of the u.s. property agents have been hired to find a suitable location. away from those two companies, you quite like some of the luxury players. >> you have to look for long term profitability and what happens to margins in a typical cycle. luxury goods does mean that we should see shares trade much
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higher. burberry is a recovery story. but the coaches are the sorts of company which is deserve a much higher multiple. >> $13.50 as sort of a fair value. >> absolutely. look at the it is counts, future profits that come can deliver, and that's the number i end up with. you think about the long term returns that company can deliver to shareholders. >> coach, ralph lauren, whdo th all share? >> brand value which is difficult to replicate. so they can sell product at a much higher price relative to their cost base than their other high street -- i think the high street generally is very difficult. for those who don't want to be in retail, i encourage look at bmw selling aggressively into
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china, increasing china consumism and branding products, as well. >> james, always good to see you. have a good week. we'll move on from luxury to i.t., we'll have an exclusive first look at the global spending. where are companies allocating their budgets and who will benefit. bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty.
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here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. ow save 50% on banners.
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these are your headlines. earnings season kicked off with a bit of a spark. phillips beat expectations in the third quarter thanks to cost cutting and solid sales growth. ceo is still worried about the macro headwinds. >> i'm concerned about the state the general world economy is in. we see uncertainty in the u.s. and china slowing. >> bp confirms advanced talks with rosneff over the say of its stake in tnk, but no decision has yet been made. president obama and mitt romney head into their final debate tonight as a new poll shows they're in a dead heat with just two weeks to go before election day. and japan records its sharpest
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drop in exports since the aftermath of the earthquake. fears the world's third largest economy might be slipping back into recession. no kelly with me this week, but you will be able to see kelly state side on "squawk on the street" in my sources are correct. she'll be there all week. ahead of the u.s. open, a little bit above fair value for the dow. 14 points above fair value. we're about 7 above fair value for the nasdaq and s&p 500 working out about under a point above fair value. european stocks not a bad week last week. today it's turned up, just up four points. we were negative to flat.
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flat for the xetra dax. cac 40 had gains of 3.4%. it's just up a quarter at the moment, as is the ibex. bond yields we saw hit fresh 7 1/2 month lows last week. here in spain, slightly higher 5.42%, but still comfortable for the moment for the spanish government. no urgency having to assist sk for assistance. italian yields also firmly below. currency markets, euro-dollar got a bit of a lift after the regional elections. and you are ro euro-dollar a bit firmer. weak trade data out of japan today. aussie dollar slightly firm. sterling-dollar ticking up a
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bit. let's have the recap for the asian trading day for us. >> a mixed day of trade for. shanghai composite managed to finish higher. metals producers led the losses after down beat earnings, but shale gas outperformed. investors continue to eye more open market operations that will lower money rates. shares in hong kong extended its eight day winning streak helped by developers and financials. meanwhile the nikkei 225 posted its longest winning streak in more than a year. fueled more easing hopes from the boj. shares of sharp jumped over 7%
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after reports that it's lifting its diss play output. south korea kospi recovered to finish marginally lower. at sx 200 pulled back from its 15 month high. the send sex still on the move. higher by 0.6%. ross, back to you. >> thanks for that. phillips said it's on track with its cost savings plan. earlier the ceo spoke to cnbc and he said despite the global headwinds, the firm was pretty well placed for it 2013 targets. >> i'm concerned about the state
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the general world economy is in. but fell lips is a case of self help. we're so focused on driving our own improvements that i believe that we are on a really good path to our 2013 targets. >> in the united states, numbers painting dismal picture. only 42% have beat on revenues. reuters suggests just 38% beat expectations on revenue in the last week, compared with 41% since the start of the period and that clocks in well below zero the long term average. chief investment officer at hsbc capital joins us from the united states. stanley, nice to see you. where will this lead us? if we're seeing revenues come in a little lower than we thought, there's a concern about a
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squeeze on margins, as well. >> good morning. good to be back with you. this is the continuing after math of the bursting of a cyclical credit bubble. and that his tore he can nily hs taken a number of years to fully reflate itself. central banks are doing a lot to shovel more coal into the furnace, but the furnace has to be utilized. demand destruction is fairly natural. so actually we've done better than we might have done hadn't these actions been taken. so i'm not much of a critic because the only thing they could have done is what they've done. i will say, though, the overhang of what i call the freckled swan, that's the swan that's got patches of all the known problems sort of comes into view
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and shifts the sent chlt. and i think we're really at that precipice particularly in europe. how long can this continue. and i saw very little progress last week out of the eu summit. >> are we sort of call in a bit of a stand off? because on the one hand, central banks are putting a lot in liquidity and we have the concern which is we know about. we know what the risks in europe are and the ecb plan is contained for the moment, we they what may happen for the fiscal cliff. which of the influences win out? >> central bank liquidity has to be cautious because it's very close to slipping in to a currency war. the emerging economies are
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complaining that developed economies are having a deleterious impact and constantly hurting their exports. the truth is it's demand destruction that's hurting their exports and their own nation growth of their domestic demand. so we're all connected. once we deregulated financial services fully in 1999, we are completely linked as a world. so there's no us and them. the problem i see most prevalent is the eurozone. this is actually becoming quite a sick joke at this point. we were supposed to have a fiscal union by april as per the summit in december which i believe was number, let's see, 19. and here we are at this point with no fiscal union, the banking union or the banking
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oversight is still up in the air. ms. merkel is sort of slowly being dragged along to more accommodation and what does it say? if we're going to give greece an accommodation and spain comes in for a conditional bailout, what does that say about the credit act of any of those conditions? and i think there's going to be a seminal moment where there's a tipping point where sentiment shifts all at once and we get a very significant impact in risk assets worldwide. >> but not yet, right? because bond yields are done at eight month lows. the o.a.t. program is weighted there. so clearly risks are curtailed. so what happens in the market in this run up to christmas? >> well, you said it perfectly. ecb bond buying plans are weighted. so basically just jawboning has gotten the yields to where they are and mr. draghi and he
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promise to give unlimited support has done the trick no now. but pretty soon there's going to have to be a check written and that's when the rubber meets the road and we'll find out all about whether sentiment can be sustained. >> so what do you do? what are your technicals telling you? buying, selling, holding? >> our technicals are telling us that we've talked, that we're rolling over, and that the back side of those rollovers traditionally have been very, very volatile and very steep potential drops in the markets. if we go back to may of 2010, if we go back to august of 2011, we saw the same meandering slow rising pattern. and once that turns over and starts chopping on the other side, look out below. could you have a very significant impact and risk asset prices. and i expect that to happen.
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this week is one of the most devastating weeks historically if we go back to 1915. and i pay attention to those long cycle issues and those historical replications of patterns because they're real and seem to reply cat. we have all the backdrop for headwinds in terms of the fundamentals that we need and whatever that spark will be. >> it's early monday morning state side. you've cheered everybody up with that forecast for the week. so we'll let you go. thanks so much to joining us this morning. other corporates we're looking at today in europe, or this week rather, heineken reports tomorrow, wednesday numbers from vw, volvo. on thursday, santander, credit suisse, as well as unilever. and erickson rounding off the week with numbers on friday. in the united states, we're looking for numbers from
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caterpillar and yahoo! today. facebook reporting later in the week. and you can head over to to read more about why some analysts think friday's earnings related stock selloff may be limited which sort of counters a little bit of what stanley fears. meanwhile canadian government has blocked a $5 billion corporate takeover deal. is it playing a protectionist game? we'll find out more when we come back. bob...
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oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
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these are the headlines today. phillips kick starts earnings season. bp confirms it's in advanced talks with rosneff. and president obama and mitt romney head into their final debate tonight as a new poll shows they're in a dead heat. some of the other stories we're following today, new survey by mastercard suggests more than 70% of u.s. consumers think the outcome of the election will have an impact on their finances. only a quarter thinks the economy will improve over the next six months.
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job security, loss of income and debt their stop worries. and has reportedly been agreed to take private. private equity firm will pay 32 bucks a share. "wall street journal" suggests the buyout group will also include the feo, fco and spectrum equity which owns 30% of the company. ancestry has more than 2 million subscribers who pay up to $34.95 a month to access it online records. meanwhile prospect global resources has struck a $2 billion deal to supply potash to a chinese chemical company. it will buy at least 500,000 metric tons of fertilizer a year
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starting in 2015 for a ten year period, twice the entire at of potash exported last year. potash is used to make potassium fertilize forecrops if you're wondering. and in m&a news, bp has confirmed it's in advance talks with rosneff. a press statement said a further announcement would be made when and if a deal is made. and the canadian government has blocked petro nas.
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we have this report from singapore. >> after canada blocked the acquisition for progress energy, many are questioning just how open canada is to foreign investment. also claims the deal won't bring any net benefit to the country. the supporters of the deal, though, say the government has been short on the precise reasons as to why they have blocked this deal and short on transparency. what we know is petronas has 30 days in which toed a just the terms to make them more palatable before a final decision is made. speaking to us here at the energy week, malaysia's energy minister was pragmatic and said if canada insisted on blocking the deal, there were alternative
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destinations for investments that malaysia could pursue. >> if with very an opportunity invest in canada, of course we will be happy. but if such an investment is not welcome, we will go to other countries. >> at $5.2 billion, it isn't a blockbuster deal, but if the progress does fall over, it could spell trouble for the $15.1 billion acquisition of maximenergy. the other thing to bear in mind is the broader angle. canada cannot afford to ignore asia and the massive demand that it brings with us. >> public opinion polls show a lot of unease about asian investment, but it's ironic because what the prime minister of canada has been in asia, the four premieres from the four
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western provinces were in china saying we want to sell things to you. so it's a two way street. >> the next step in the story is whether petronas will sweeten the terms or simply walk away. still to come, the explosion of mobile devices is having an impact on the up kerr aconsumer corporate market. up next, exclusive results of the global i.t. outlook survey p.
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we're implied slightly higher after friday's selloff. the computer maker third quarter net profit, but taiwanese pc maker still struggling to boost sales as it faces stiff competition from devices like tablets. gartner is holding its annual symposium in orlando this week. more than 8,000 chief information officers are discussing some of the big
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issues. they will reveal their latest spending outlook. and joining us with a first look is head of research at cartner. thanks for joining us and givings us this first look. here's the key question. will i.t. spending get better, worse or stay the same? >> this year is a pessimistic year. the market will only grow about 1.7% this year. but next year, we actuallyaccel. it makes it a $3.7 trillion market. so we're on you are on way to passing that $4 trillion market in 2015. >> how much is mobile playing a
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role? facebook has mobile challenges, as well. how big will that impact be on everyone in i.t.? >> the mobile device market is actually the bright spot about we're seeing replacement with tablets and smartphones. so it depresses the market slightly this year. we see a decelebration next year. in mature market, both consumers and markets are adding tablets. we're seeing replacement in the second generation smartphone. so what's happening is an
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acceleration of mobile devices that have the cape act ability running applications will end up about 6 billion devices being purchased annually. >> so what are the implications for r.i.m. and the laptop guys? >> what's happening is essentially a large portion of of the workforce start to have tablets or start phones for their primary device. we'll have two-thirds of the workforce with a tablet device. two years from now, smartphones will surpass blackberries as the
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primary device enterprises use. so it changes the software market. the traditional software providers will have to rewrite their applications for these tablet based environments. are consumers are now mobile and this is for a complete change of architectures. the architectures that companies have built over the last 20 years are really obsolete. >> the other side of this, you talk about big data and the investment in there, explain what you mean by that. >> big data is the capability of analyzing all the information that company has available to them, both structured data and unstructured data. that can be e-mail or video or audio feeds. this is leading to an explosion
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of information in companies. as we also start to put chips in to productses that we buy, we see a real acceleration in the availability of information. this creates essentially a new layer in our economy because we're turning information into revenue. we're seeing lots of companies starting to build divisions or parts of the country where they're actually building this. this creates jobs. >> you say 6 million jobs in the u.s. will be created by the information economy over the next four years. 6 million. i speuppose the thing is, have got enough educated or qualified applicants to fill those jobs? >> yes. we believe globally we'll create 4.4 million jobs that are i.t.
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related jobs as a result a big data over the next three years. 1.9 billion of those will be actually in the united states. each of those jobs create another three jobs of sort of administrative or support based functions. and so in the united states, we over the next three years have the ability to create 6 million jobs. however our education systems frankly across the globe as well as training within companies is 1i6r78ly not the sufficient to satisfy that demand. so only one-third of this will be filled. so this sort of places a requirement on our education systems and also of companies to start to train these kind of roles. we need to analyze data and information and turn it into
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revenue. essentially taking the product economy and adding another layer on top of it that starts to generate revenue from companies. we're seeing companies like ge and auto manufacturers start to actually use that as a way to generate additional revenue. >> peter, good to speak to you this morning. it's early down there in orlando. hope you have a good week. big changes coming through. coming up, we'll bring you the latest on a so far underwhelming earning season. we'll preview as well the third and final u.s. presidential debate that kicks off tonight.
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if you've just joined us, here are the headlines. earnings season in europe kicked off with a spark, phillip beating expectations. but the ceo is worried about macro headwinds. >> i'm concerned about the state of the general world economy. we see uncertainty in the u.s. and china slowing. >> president obama and mitt romney head into their final debate tonight as a new poll shows they're in a dead heat with just two weeks to go before
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election day. and companies will increase i.t. spending by nearly 4% next year. it's the start of a new trading week. things looking for a slightly better start today if you're long in the market. s&p 500 currently just over two points before fairly. dow krptly some 20 points above fair value. negative in asia, but have turned up to the highs. up around four points. not bad gains last week.
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we're starting off on a cautious footing today. there have been plenty of experts globally on cnbc. here's just a recap of what some think investors should to for the week. >> in the italian market, buying the february 15, selling the november 15 and buying september 16. the way that works is that if the peripheral yields start to rise, that position should come back into profit. >> you've had bonds performing contra cycling. last year extremely strongly. people taking negative adjustments to bonds. so i think we need to get back to equities going forward.
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>> technically as well the brand is broken up, hit high, come back in the middle of the range. it seems to haveless its own momentum. so somewhere along the line it's the trade to do, but i'm not sure this is exactly the right time. >> president obama and mitt romney face off for the final time before election day. just 15 days away. cnbc's john harwood previews the debate from south florida. >> the final presidential debate of the 2012 election campaign takes place here in boca raton, florida, in a deadlocked race for president. new wall spreet journal poll shows from of president obama and mitt romney tied at 47% among likely voters. among all registered voters, president obama leads by five. but the likely voter number shows the premium attached to turnout in deciding this election. the debate will concern foreign policy, it's moderated by bob
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schieffer of cbs. president obama draws positive ratings, 49% to 46% on his handling of foreign policy, but mitt romney has drawn closer perhaps in part because of the libyan violence fallout. mitt romney now trails by just three percentage points on who would be a better commander in chief. more importantly, mitt romney has asserted his advantage by six percentage points on who would do better in handling the economy and you can bet even though this is a foreign policy debate through issues like trade, the candidates will find a way to bring it back to the economy, the top issue for voters. >> what about the white house race? for more we're joined by tony fratto. nice to see you this morning. so how is this going to pan out tonight in the poll has everybody neck and neck. clearly turnout will be
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important. what will you focus in on the debate tonight? >> i think there's a lot there. what's interesting on the minds of voters, when you think about it, it's more like 20 debates. it's hard to believe this is the last one. but it's drawing huge audiences. but foreign policy isn't number one on their minds in terms of the issues that will decide things for them. the challenge for mitt romney is he wants people to go home and to be comfortable with him in the role as commander in chief. the problem has play that had role, so they know what they're getting with him. >> the election won't be decided on it, but can it do any damage
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if you get it wrong? >> absolutely. it can disqualify you if voters are not comfortable with you. but i don't think it will be the big mar chin al change in this race. but if they suspect that mitt romney who has been a governor and they've seen him a lot on tv lately, if they suspect he would not be a strong commander in chief, you could see where that would change their view about him overall. so they have to be comfortable with him, they have to be imagine him in the oval office and speaking to them about really, really big issues. and of course we have big international economic issues that we expect them to get to,
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as well. >> you just spent a couple of weeks in asia. how are they viewing their debate debates. >> i spoke to a lot of people in beijing and the number one and number two questions i got from everybody, whether private sector or in the government that i spoke to, number one is what's going to happen with this election and number two what's going to happen with the fiscal cliff. so they're paying really close attention. they know they'll play some role in presidential elections that they'll come up as a competitive concern in the minds of voters and candidates will treat them that way. i think they're getting a little bit tired of the amount of money being spent bashing china because it has real commercial
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interests. >> there's a difference i guess between china bashing in the run up to an election and then actually policy post, isn't there? >> yeah. the administration would deny that they made any of these decisions whether it was the wto issue or denying some of the chinese investments here. the chinese did not see it that way. the view of the chinese i can tell you, there's absolutely no question in their mind that these were politically motivated decisions. and so all of these have an impact on our bilateral economic relationship and of course they hear governor romney's commitment to name them a currency manipulator, as well, should governor romney become president romney, that will be a
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tricky diplomatic issue. they're paying attention to that, as well. >> and how much does the election result affect what happens with the fiscal cliff? some say whatever happens, they'll cobble some temporary agreement together until the middle of next year. >> taking partisan concerns out of it, i think it becomes easier depending on the makeup of confidence if up a new president who is afforded some opportunity to put his economic policies in place, it becomes a little bit harder if it's the same exact partisan break down that we see today, republican house, a democratic senate and president obama. all the actors on stage are exactly the same and it's hard to imagine a much different outcome. if a new president is in place and especially that's a new congress, i'm sorry, if
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republicans would take the senate, that really would change the dynamic because it would mean congress would be able to produce a budget and romney could put new policies in place that haven't been thought about. but that's a remote possibility given where the senate races are going and just becomes hard to imagine. so i think we'll see some of those issues put off, but how they're kicked town the road and the nature of the can kicking changes depending who the new players are. >> same game, but we play it differently maybe. tony, thanks for that. angela merkel saying she has no intention to canceling the eu summit over a british position.
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this is the ft suggesting germany that there would be a german capitalize. we'll take a short break. still to come, steamed over starbucks. the coffee by aunt is under fire for the amount of tax it pays in the uk. how little it pays. we'll have reaction from the ceo. bob...
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oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
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police and protesters clashing in london on saturday as hundreds broke away from anti-austerity demonstrations. allegations they don't pay enough tax. at the same time, the cfo of starbucks has spoken about criticism of the amount of tax that it's paid despite racking up 3 billion pounds in sales in over a decade, the seelgt based firm has only paid 8 million pounds incorporation tax and nothing since 2009. based firm
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million pounds incorporation tax and nothing since 2009. based firm has only paid 8 million pounds incorporation tax and nothing since 2009. >> i was surprised to see the headlines come out because i think they're somewhat sensationalized. so let me try to explain the situation. over the last three years, starbucks has paid 160 million pounds of taxes in insurance, real estate taxes, and so that's one piece of the puzzle. the accusation that we have not paid any taxes should be skewed to the fact that we haven't paid income taxes. and the reason is we are not a profitable business in the uk. and we haven't been profitable for a while as a result of the significant investments that we've made in that market. and so being accused of not paying income taxes, it has to be related to whether or not you have made a profit.
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we have paid 160 million pounds in other taxes, but we haven't paid corporate income tax because we have not made a profit. no one has suggested any as secretary spect of doing thinking unethical, but the headlines have been sensationalized.p spect of doing thinking unethical, but the headlines have been sensationalized.aspsp unethical, but the headlines have been sensationalized.asppet of doing thinking unethical, but the headlines have been sensationalized.ect of doing thinking unethical, but the headlines have been sensationalized. phillips beat expectations and bp is in advanced talks with rosneff. and president obama and mitt romney are heading in to their final debate tonight as an nbc "wall street journal" poll shows they're in a dead heat. plenty more to come.
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greg smith former goldman
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sachs bp is back in the spotlig. he's authoreded ea book and saye doesn't think he's portrayed his former employer. >> i didn't go to wall street purely to make lots of money. >> i don't know anybody who has ever gone to wall street with -- and not had the idea of making money. >> i definitely wanted to make money, but you left because things had veered so far from what i believed was right, i could have left and walked out and said nothing about it, but i would have felt that was not the right thing to do. >> goldman has characterized smith as as it is grunt he willed employee. the bank looked into his claims and nothing was found. >> i'm not really concerned about the revelations. i'm not looking forward to the
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hoopla around it if the hoopla that greeted his op-ed was any indication. but there's not a lot in to begin with. i never spoke spoke to greg smith. >> on the agenda in the states today, no economic data, but investors can look forward to the two day fed meeting which begins tomorrow and first quarter gdp out friday. seven big names report earnings. caterpill caterpillar, freeport, sun trust all before the opening bill. after the close, texas instruments and yahoo!. so what about the trading week ahead? joining us is mike gurhka. mike, good to see you. that selloff on friday, futures are pointing a little bit to a firmer start. how will we fwe through the week and today? >> technically it looks like we're holding in levels here. so people are surprised that it
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isn't more of a deceleration in prices coming off of friday. but as just mentioned, it's all about the fundamental news off these earnings and i think that's what spurned us to get to these areas and we'll have to get more confirmation take. not that it's more important than the fed, but everybody will be focusing on the payroll number and i think earnings will probably make us get a little more choppy here, but value buyers and equities and clearly in the commodity space is really pairing their size down because they feel volatility could be chopping them up. >> so are people buying much down side protection? >> they've been trying to do it in the options markets with put, but a lot of people who have shorter views of the market have come in with anticipations of starting the day short and either getting a confirmation to keep their profits small or let it go through most of the day, but i'm not seeing a lot of buy orders come into the markets
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just yet. >> on the s&p, what are the levels you're looking at? >> 1415 seems to be a pretty big level, the psychological 1400 of course. but we'll have to really come off to start to see the levels as we started to deceleration. . some of the targets all wait down are 1373, but i think that's more of a proceed found move. i think from those level, you'd see a lot more buying come into the market. >> are we in a holding person between the liquidity and the declining fundamentals? what wins out? >> i think the fundamentals will continue to win out and a little bit on the u.s. side in regards to this election, there's a lot of talk about if the current
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administration wins this election, that gold will be one of the biggest winners and that's one of the reasons you're starting to see a lot more people start to have a belief at least that if gold can break down further in anticipation of what we're seeing here over the next two weeks, that's where the buy orders will start to come in. i'm really keeping an eye on the gold market more than anything. >> how much of that depends on what's happening with the dollar. >> because dollar yen is firming up. >> and at the same time, i think a lot of these beliefs that the euro will continue to break down has just been straight flat out wrong including the guy sitting in this chair. and as you start to see the way that we hold 1.30 and gravitate toward that level, that's one of the reasons why at least dollar related we're starting to see this a little bit of a selling pressure on gold and i think that's where value comes in to the market. >> mike, between to sgood to se. that's it for "worldwide exchange." "squawk box" comes up next.
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good morning. take's top stories. the bulls look to battle back. stocks coming off their worst session sinces june. earnings and the economy, both big tests for the market this is week. quarterly reports from more than 150 s&p companies. plus a two day fmoc meeting and a first look at third quarter gd. and it's your money, your vote, the final presidential debate set for tonight. it's monday, october 22nd, 2012, "squawk box" begins right now. good morning, everyone. welcome to "squawk box." i'm becky quick along with joe kernen and andrew ross sorkin. don't forget for


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